2015 (11) TMI 241 - AT - Central Excise

Rectification of mistake - Valuation - Inclusion of freight and transit insurance charges and Dharmada charges - Held that - Apex Court in the case of Mentha & Allied Products Ltd. Vs. Commissioner of C. Ex., Meerut reported in 2004 (5) TMI 74 - SUPREME COURT OF INDIA has held that when different views were expressed at different stages by the Tribunal and High Courts, application of extended limitation period under proviso to section 11A1 and penalty under section 11AC would not be justified. - ratio of this judgment would be squarely applicable to the facts of this case, and therefore, there no penalty would be imposable on the appellant for non-payment of duty of dharmada charges - Tribunal s order uphelds only part of the Commissioner (appeals) s order confirming the duty demand on dharmada charges and there is no confirmation of the part of the Commissioner (appeals) s order imposing penalty on the appellant. However, for removal of any doubts, it is clarified that by the final order dated 5/2/2014 2014 (4) TMI 606 - CESTAT NEW DELHI only the part Commissioner (appeals) order confirming duty demand on dharmada charges has been upheld and the part of the order confirming duty demand on freight and transit insurance and imposing penalty on the appellant is set aside. - Decided partly in favour of assessee.

Summary

Issues:
1. Rectification of a mistake apparent from the record regarding inclusion of charges in assessable value.
2. Imposition of penalty under section 11AC.

Analysis:

Issue 1: Rectification of a mistake apparent from the record regarding inclusion of charges in assessable value:
The case involved a dispute regarding the inclusion of freight, transit insurance charges, and Dharmada charges in the assessable value of goods manufactured by the appellant. Initially, the Assistant Commissioner held that these charges were not includible in the assessable value. However, the Commissioner (appeals) reversed this decision, including both the freight and transit insurance charges as well as Dharmada charges in the assessable value. The Tribunal, in its final order, upheld the Commissioner (appeals)'s decision on Dharmada charges but set aside the inclusion of transit insurance charges. The appellant filed a Rectification of Mistake (ROM) application, arguing that there was no justification for imposing a penalty under section 11AC as the issue of including Dharmada charges in the assessable value was not settled at the time of the dispute. The Tribunal agreed with the appellant, citing relevant judgments that supported the appellant's position. Ultimately, the Tribunal clarified that only the part of the Commissioner (appeals)'s order confirming duty demand on Dharmada charges was upheld, while the inclusion of transit insurance charges and the penalty imposition were set aside.

Issue 2: Imposition of penalty under section 11AC:
The appellant contended that there was no justification for imposing a penalty under section 11AC as there was no malafide intention in not including Dharmada charges in the assessable value, especially considering the legal uncertainty surrounding the issue during the relevant period. The Tribunal, after considering both parties' submissions and reviewing the records, agreed with the appellant's argument. The Tribunal referenced relevant judgments to support its decision that no penalty should be imposed on the appellant for the non-payment of duty related to Dharmada charges. The final order clarified that only the part of the Commissioner (appeals)'s order confirming duty demand on Dharmada charges was upheld, and the part confirming duty demand on freight, transit insurance, and imposing a penalty on the appellant was set aside.

In conclusion, the Tribunal disposed of the ROM application, clarifying the specific aspects of the Commissioner (appeals)'s order that were upheld and set aside, ensuring that there was no confusion regarding the inclusion of charges in the assessable value and the imposition of penalties.